Stock market hits new highs The ‘Teflon market’: Why stocks keep setting new highs despite Trump drama
The S&P 500 has gained 10% since Trump’s victory.
Stock market hits new high with longest winning streak in decades. Great level of confidence and optimism – even before tax plan rollout!
— Donald J. Trump (@realDonaldTrump) February 16, 2017
However, thank free markets, profits & earnings growth, exports, consumer spending, web 2.0, technology, and innovation by America’s best and brightest, not Obama.
Glad I ignored all those people who said to sell stocks if Trump won…Bitcoin will also keep going up. Same for home prices in Bay Area. My favorite picks, Google, Facebook, and Amazon, keep doing well too. the Snapchat IPO will also likely be a success and I’ll buy some of that (but not much). These companies have become an inseparable part of everyone’s lives…people using Google for search, and there are Google Adsense ads everywhere (all major sites have them…Bloomberg, NY Times, WSJ, Forbes, etc). Everyone shops on Amazon, which is overtaking offline retail. Over a billion people login to Facebook every day and also click the Facebook ads, which advertisers spend billions of dollars every year on. Also, there is Instagram and WhatsApp, both owned by Facebook are are seeing huge growth and ad spending.
Barry Ritholz, who despite being on the ‘left’ provides a sober and rational outlook on political and economic matters, has a list of all the pros and cons stock market under Trump The Investing Pros and Cons of Trump:
No. 1. Tax Reform: This is the big one, and it includes tax cuts, cleaning up the corporate tax code and repatriation of trillions of dollars of corporate profits parked overseas to avoid onerous taxation. As noted before, it would be hard to beat the economic impact of tax cuts, tax reform and the return of all that overseas money. Add this to No. 3 on our list, and you get Keynesian stimulus at its finest.
No. 2. Deregulation: Hope comes not only from the financial sector, which has enjoyed a bigly post-election market rally, but from lots of other industries. The wishful thinking is that the cost of doing business declines.
No. 3. Infrastructure: Trump seemed at one point to be gung-ho on a plan to spend as much as $1 trillion on refurbishing and expanding America’s bridges, roads, tunnels, ports and water systems. As we pointed out yesterday, it is long past due.
No. 4. Sentiment: All of the above have combined to make business people and investors more optimistic, which of course feeds into what we’ve seen going on in markets.
Barry also lists the potential negatives, which in my opinion are vague and vastly outweighed by the positives. Should Trump get his way, which given the GOP-controlled house is almost certain, we can expect a couple trillion dollars of more spending on top of existing spending projections. Much of that spending is going to flow into the economy, housing market, and stock market. Even if tax cuts do not pay for themselves, because the USA can borrow at such a low rate, the spending adds to top-line growth at almost no immediate cost.
I don’t like Zuck’s politics, but Facebook has been and will continue to be a great investment, and Zuck seems to know how to please the people who matter most, the shareholders. Same for Google and Amazon, which despite censorship from the former (by deleting YouTube videos and accounts that post ‘controversial’ stuff and then making up lame excuses such as ‘copyright violations’ for a mini soundtrack from 25 years ago or some other BS) and crappy politics from the CEO of the latter, continue to be good investments. Sometimes you can’t agree or have everything. Zerohedge, although they tacitly support Trump, has been wrong about the economy and stock market since 2009. I don’t take my politics and investment advice from the same source: Facebook has crappy politics but it has been a great investment; I agree with the alt-right on things like anti-democracy, Trump, anti-feminism, anti-SJW, Nietzsche philosophy, HBD, etc., but not on the doom and gloom economic stuff.
Gab is gaining momentum as an alternative to Twitter, but alternatives to You Tube are more elusive.
I tend to be more of an empiricist when it comes to certain issues. It’s empirically obvious to myself (and others) that SJW-liberalism is as much of a mental illness as it is a failed ideology, that the alleged ‘college rape epidemic’ is a combination of hoaxes and false memories, that biological differences between men and women and races exist and such differences manifest in socioeconomic outcomes and IQ scores, that capitalism > communism, that ‘rape culture’ is a also myth, that the mainstream media is rapidly losing credibility, and that democracy as a system of government is deeply flawed. Yet at the same time, the empirical evidence also shows that that US economy is not dying, but is doing quite well as measured by data such as consumer spending, technological innovation, exports, and profits & earnings growth. Although there is some some civil unrest and angst in America, the empirical evidence again shows it’s not abnormally high relative to earlier decades.
However, there is significantly more unrest in counties such as Turkey, France, and Brazil (so much so that it threatens their economies), but I would never invest there nor recommend anyone else do so. I have been bearish on emerging markets and Europe since 2013. Emerging markets and Europe have significantly lagged the S&P 500 since 2011, as another example of a correct prediction by this blog. Low-IQ countries tend to have a lot of unrest, graft, inflation, and corruption and make bad investments. Italy and Greece are much closer to being an ‘idiocracy’ than America. In America, the Tea Pot Dome scandal and Watergate are still a big deal, to give an idea of how rare corruption in America is compared to quotidian corruption in Brazil, Argentina, Venezuela, and Turkey, which fills volumes and is a part of everyday life for those countries.
I am ‘short’ Europe and emerging markets while ‘long’ US stocks and treasury bonds. If there is global civil and economic collapse, Europe will most certainly go down the drain first and the deepest and furthest down the drain. I will profit from the differential (America minus ex-America), so even if there is collapse I will come out ahead.
Another reason I’m optimistic is because the neocons in Congress, even if they aren’t crazy about Trump, will gladly accept lower taxes, deregulation, more military sending, which is what Trump wants and what the stock market wants. Trump may cave on some issues to get his other policy passed. If Congress stonewalls Trump, then fears of Trump upsetting the economy through ‘rash policy’ will be abated, which is an undue fear to begin with.
Overall, the fact so many pundits were wrong about Trump and the stock market is further reason why they (and the rest of Fake News media) are losing credibility. Let them fail…their absence won’t be missed.